The JSE is facing lower Asian markets after US markets retreated overnight, partly because of US Federal Reserve officials indicating interest-rate hikes might continue well into 2023.
The Hang Seng in Hong Kong was down 2.53%, the Shanghai composite in mainland China 1.00% and the Nikkei in Japan 0.32%. Year to date, the Hang Seng is down 23.55%, the Shanghai composite 14.96% and the Nikkei 4.64%.
Asian markets were largely affected by hawkish remarks by US Federal Reserve officials, which stoked fears that the central bank will continue to raise interest rates well into 2023.
San Francisco Fed President Mary Daly said that pausing interest-rate hikes is “off the table right now, it’s not even part of the discussion”, and Kansas Fed President Esther George added to the sentiment.
New Covid-19 cases and outbreaks in mainland China added to concerns on the Hang Seng and the Shanghai composite, partly because of protests in Guangzhou about the ongoing Covid-19 protocols.
Meanwhile, the People’s Bank of China (PBOC) warned that inflation may increase as demand recovers, leaving it with less room to manoeuvre with its monetary policy.
Tencent, which influences the JSE via Naspers and Prosus, retreated by 2.31% and has fallen by 36.62% in 2022.
Naspers is in for a R100bn payday after Chinese internet giant Tencent unveiled a plan on Wednesday to distribute its stake in Chinese food-delivery business Meituan to shareholders.
Tencent’s announcement is good news for its largest investor, Naspers, which owns the stake indirectly via its Dutch-listed e-commerce business, Prosus. Naspers has underperformed in the stock market over the past two years, shedding more than half its value as it bore the brunt of Beijing’s brutal crackdown on tech firms.
Japanese markets were weighed down by the losses on Wall Street and traders reacting to new domestic economic data showing that the trade deficit widened more than expected in October.
JSE weaker, US markets in the red
In local markets, the JSE ended weaker on Wednesday after a muted session, though market heavyweight Naspers had another solid performance in line with the rebound in technology stocks globally.
The all-share index gave up 0.54% to end at 72,607.46 points, dragged lower in part by resources and mining stocks such as Anglo American, which fell 4% to R657.60.
US markets ended in the red on Wednesday with the Nasdaq dipping 1.54%, the S&P 500 0.83% and the Dow Jones 0.12%. The Nasdaq has lost 29.36% of its value in 2022, the S&P 500 17.47% and the Dow Jones 8.29%.